Though turmoil in the banking sector appeared to have been extinguished with JP Morgan Chase's takeover of First Republic Bank, the problems remain.
Many analysts believe smaller banks, with their greater vulnerability to various risks, will be unable to keep the crisis contained. Recently Fitch Ratings Service issued a warning that banks with less than $100 billion in assets are “more susceptible to deteriorating commercial real estate fundamentals than larger banks.” That could lead to “ratings pressure,” Fitch said, “given their higher relative exposure as a percentage of assets and total capital.” About 70% of all outstanding commercial real estate loans in the US are financed by small banks.
Comparing the current financial crisis to that of 2008, which emanated from the mortgage crisis, a notable detail jumps to the forefront: About $559 billion in total assets of the three banks that failed this year exceeds the amount held by the 25 that fell in 2008.
You are welcome to watch Wolfline Capital's review on this subject by following the link below: